Debating the return of film incentives to lure back production to Michigan

A key proponent of Michigan's now-defunct movie tax incentives program wants to renew public policy luring the industry, but with a new objective: Make this state the "Silicon Valley" of film and media.

Former Senate Majority Leader Randy Richardville said at Detroit Homecoming this month that he would start building a new strategy to get Michigan on the front lines of the transforming media business that has strayed from its focus on hubs like Los Angeles.

He went so far as saying after a Sept. 20 panel on the subject that he'd kick off his efforts the following Monday with a 9 a.m. call to Gov. Gretchen Whitmer.

It would be "great" if the Legislature or Whitmer jumped on board to develop new public incentives, Richardville said after the panel. But he wants to advocate, regardless, to stimulate a second wave of entertainment business — one centered on innovative technology, not big-screen movie shoots.

Richardville moderated a panel on public incentives to build digital and media arts locally during Detroit Homecoming, the Crain's-produced annual gathering that draws former metro Detroit residents back to the region to learn and invest.

The panel comprised Nancy Tellem, executive director in MGM's Office of the CEO who moved to Detroit four years ago and has advocated for state public policy to attract film and digital media business; Mitch Albom, an author, Detroit Free Press columnist and screenwriter; and Tim Flattery chair of entertainment arts at the College for Creative Studies.

Richardville said he's scheduled to meet this week with a Whitmer staffer, and made a round of other calls to people he would not discuss. He is also laying the groundwork for an advocacy group to "get this message right."

Asked how he would allocate public dollars for digital media businesses, he said it's early in the process and he needs to do more research.

But Richardville is careful to note it would not look like the Michigan film incentives Snyder axed in 2015. They are a "dead way to go," said the former lawmaker who watched them evolve the first time.

Michigan started its movie incentives program in 2008 as a refundable tax credit that insiders said at the time made Michigan the most lucrative state for those seeking such tax breaks.

It was converted into a more limited cash rebate program at the end of 2011, and then Snyder signed a law in July 2015 ending the practice entirely. It enticed productions such as "Gran Torino" and parts of the "Transformers" series to Michigan. The state paid out $292 million in 2008-2011 and $108 million under the rebate program that followed, according to the Michigan Economic Development Corp.

Critics including the Michigan Chamber of Commerce said at the time that spending millions on moviemaking was unjustified and few full-time industry jobs had been created.

"If past is prologue, then (a new film incentive program) would be harmful," Michael LaFaive, senior director of the Morey Fiscal Policy Initiative at the Mackinac Center for Public Policy, told Crain's. "We've already wasted hundreds of millions of dollars that could have been better spent ... It's just unfair making everyone in the state ... pay full freight so a narrow group of special interests can get subsidies ..."

There were fewer film jobs in Michigan as of April 2015, just before the program ended, than when it started in 2008 — 1,561, versus 1,663, according to Bureau of Labor Statistics data cited by the Mackinac Center for Public Policy in an MLive column.

Soon after the state opted out of the incentive game, the Michigan Film Office rebranded to the Michigan Film and Digital Media Office, hoping to attract less-mainstream segments of the media industry — gaming, animation, computer-generated imagery and others in creative pursuits — as it reinvented itself in an incentive-free climate.

Panelists also talked about new media consumption. The entertainment business has evolved since the birth and death of Michigan's film incentives, Tellem said. Netflix, YouTube and other nontraditional channels have fragmented the industry.

With the improvement and ubiquity of technology, "anyone can make a film," said Tellem, who is also executive chairwoman of interactive media company Eko.

In Richardville's telling, Michigan would incentivize technology businesses and creatives to come set up, building an innovation hub that acts like a "magnet." He pointed to pre- and post-production, animation technology, commercials and other segments.

Though Whitmer mentioned the film industry in a tweet earlier this year, her office told the Michigan Advance this spring that Whitmer was not planning any new film incentive legislation.

And the Michigan Film and Digital Media Office is not looking at returning to incentives, MEDC spokeswoman Kathleen Achtenberg said in an emailed statement to Crain's. But the office is "committed to growing Michigan's film and creative economy and talent base by providing film business services like guidance on permitting, location scouting and promotional support ..." the statement said.

Crain's request for an interview with a film office representative was not granted by the time of publication.

As well as discussing the monumental shift in the industry, panelists pointed to what they said Michigan is missing out on.

"It's all about costs now," Tellem said of traditional film production. "And every production right now is about, 'Where can we go to save money?' And it's so frustrating. We're actually, at MGM, producing the Aretha (Franklin) movie, and we're going to Atlanta, (not Detroit), and it's one of those things that's absolutely absurd … We're only looking at places that offer tax credits, because there's more demand for content. The cost of production is going up ."

Flattery of CCS, a concept artist who has worked on many major franchises including "Batman" and Marvel Comics movies for more than 30 films including "Avengers: Infinity War," said he's watched how tax credits have affected states that have embraced them, including Georgia and New Mexico.

"There's this interconnection between the community, the film business, small businesses, and it's created a whole new culture there," Flattery said of Georgia. "So then I'm frustrated about the lack of insight in Michigan, because given what we have as a state and what we have to offer the film business, we could have been there and surpassed that."